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NSW Motorbikes vs Cars FBT & Salary Sacrifice

Discussion in 'Politics, Laws, Government & Insurance' at netrider.net.au started by Doddles, Feb 28, 2006.

  1. So can anyone with commercial / tax law knowledge explain to me why it is that i can salary sacrifice for a car and the tax Commisioner doesn't mind what i use it for but he won't let me salary sacrifice for a new bike because of the FBT arrangements.

    Next stage I guess is to write to the Commisioner decrying this discrimantory ruling!

  2. I went all through this last year - the real problem is that it's more complex for the employer so they don't like it.
  3. Hmm love this idea though - we can bundle anything up over here including mortgage repayments - all kinds of vehicles etc - its outsourced to a company, we sspeak to them directly and they submit paperwork to company afterwards.
  4. I had looked into this as well and found similar to Tony.

    In short - the employer would approve cars because they have pro-forma's etc. (based on other peoples applications) but very few bikes. So they didn't do it because it was not common, and the work outweighed the benefit (for the employer that is).

    With that said some employers have approved bikes under salary sacrifice. I think it was one of the matt's on this site that salary sacrificed to get a trimph sprint st.
  5. A lot of companies don't allow staff to ride bikes on company time due to the added risk involved (ie a small crash in a car can cause minimal damage to the driver while a small off on a bike can be a heck of a lot worse).

    They cant control how you get to work but can prevent you riding during their time.

    As for why you cant salary sacrifice, maybe no one has tried to yet. The Tax Office rules don't just appear but have to be determined, and to get a determination someone has to try first from what I understand.
  6. depends if your job involves going site to site, and abike is you only transport..... they can't prevent you doing that..Unless they provide a car of course :)
  7. aaaah geezus...... there is some rubbish posted here

    re the question-
    "So can anyone with commercial / tax law knowledge explain to me why it is that i can salary sacrifice for a car and the tax Commisioner doesn't mind what i use it for but he won't let me salary sacrifice for a new bike because of the FBT arrangements. "

    the reasoning is simple.
    the Tax office will allow you to do it* but there is no reason to do so
    under the FBT act, cars are concessionally treated !
    that is ....the full cost of the car inc FBT is NOT lobbed onto the
    employee under any salary sacrifice agreement with the

    any payment by an employer in relation to a motorcycle
    (such as a rego or lease payment) is caught under the
    Residual Benefits section of the FBT Act
    and as such, the effect of the FBT payable on any salary
    sacrifice arrangement means that the employee is NO better
    off with the employer paying the bills,
    why? the full cost of the FBT relating to the bike goes against the salary sacrifice arrangement!
    so... the employees net cash situation will be the same
    whether the employer or employee pays the motorcycle bills
    (unlike cars)

    * whether your employer wants to is another question


  8. ok folks - thanks for the feedback - looks like I need to write to the ATO to find out why cars are concessionally treated and motorcycles are not

    or maybe I could just complain about the unfairness of it all to 3AW / ACA / TodayTonight :wink:
  9. nup...lil' John and big Pete in Canberra are better targets
    the ATO only follows the legislation the pollies put into place :evil:
  10. hehe- I can hear the promo now...

    "Motorcyclists. They already create havoc on our roads, now, hear how they want to claim concessional tax rates on their death machines. Details after the news..." :p :p :p
  11. Can you explain this a bit better, please? I don't understand what you're trying to say.

    And this bit too.

    Reason why I ask is that we do novated leases (sal. sacrificing) of motor vehicles, power bills, laptops, tools of trade, etc. A sister company with the same benefits at one time also did bikes.

    And there is a difference as you say (but barely understandable) between FBT on cars and bikes. A car needs to travel more kays to reduce FBT, whereas the salary packing company that we deal with explained it to us that the more kays that the bike traveled the more FBT it paid.

    So, what some guys were doing was to buy, say an expensive Harley and then mothball it, so to speak. At the end of the lease, they'd flog it off and make a decent profit on it.

    Recently we tried to get bikes back onto the allowable list but the problems stopping us stemmed from issues that the salary packaging company (RACV Salary Packaging) had with bikes. So, it was knocked on the head.
  12. Yeah, I tried to salary sacrifice my bike too, but no go :( Would be nice if I could salary sacrifice my mortgage repayments :)
  13. That's usually only available to certain industry sectors such as non-profit organisations. And that usually means that they're low paid anyway, so the tax benefit would be minimal, unlike higher wage earners who can get their top rate back under 48 cents in the dollar.

    For us, when the tax rate changes in July, it'll put me firmly in the lower bracket. My car lease won't have the same benefits and I still have a year to run with it.
  14. In really simple lay-mans term, without getting technical, a car is more likely to be used for work to run erands, or visit clients (you see it has a back seat and a boot to put your breifcase full of lunch into).

    It is unlikely employers actually allow staff to visit clients in leathers as opposed to a suit and tie, so a car is needed.

    The reason cars were originally allowed is because it is expected that there be some portion of work related use (this is backed up by the mathematically formulated various types of records required)

    If you do use your bike for work, just keep a logbook and claim a tax deduction that way.

    But in general, the comments above are correct that employers don't like it so they throw it into the too hard basket. Oh, and yes Smitty, because of the residual benefits law, it would be of no benefit (you must do what I do for work)

    Residual benefits are basically miscellaneous benefits.
  15. Usually, when an employee salary sacrifices a car it's for his her personal use. For work use you either have a work car or if you use your own, then you can claim that in addition to the novated lease. At least, that's what we do, if we have to say, go to Melbourne for a training course or whatever.

    Which is? It'd be nice to know if what we are seeing here are the views of professionals, rather than the opinions of laypeople. No offence meant, etc.. But from what I'm reading here about this issue, a lot of it doesn't gell with the experience that I have had with novated leases and salary packaging in general.
  16. Depends. The ATO generally can make rulings in specific cases. For example, where I am, we can salary sacrifice our power bill because we make the stuff. Next door, while they make the stuff too, they have different payment arrangements in place. Why they're different, according to our accountant, is that each site has its own ATO ruling.
  17. As much as salary sacrificed cars are often purchased personally(with the salary sacrifice agency only providing the cheque), and the car is used for 100% personal use, that doesn't mean that the provisions of the arrangments say it is a personal car. I have a novated lease on my salary sacrificed car and by law, if I want to claim days unavailable due to being away with work, the car is supposed to be left at my place of work with the keys in the hands of my employer. This never happens but by rights, it could be policed if it was worth the effort - which I guess it isn't. It does show that legally(or taxally :grin: ) the vehicle is still work related.
    If you consider this compared to 100% owned and operated work vehicles, there is no way most employers can justify having motorbikes as work vehicles. Just for the OH&S risks alone.
  18. This is coming from a fully qualified numbers nerd, however I have no actual experience whatsoever in this particular area!

    As I understand it the FBT is calculated depending on the number of business vs private km's the car travels. Basically the more private km's a vehicle does the more FBT it will attract. Hence with a bike as was mentioned earlier - it is less likely to be used for business purposes and therefore will attract higher FBT.

    In saying this though it really depends on the way the arrangement has been set up - the ATO don't like to make these things simple remember.

    *DISCLAIMER* - This information is not intended to be relied upon for the purpose of making financial decisions. Please seek appropriate financial advice from a registered financial advisor. :p
  19. My employer, until recently, provided the means to salary sacrifice motorbicycles. Guess who, among others, managed to put their little hand in the air and procured one???

    For the record, a brand new 05 Speed Triple, Shoei X-11 helmet, ALL running costs, reg., insurance etc. etc. etc. is costing me about $60 per week...I love it!!!

    PS. The lease is over 3 years.

    PPS. Sorry

    PPPS. Suffer
  20. Bastard!

    Hey, how would you like to lease a SECOND bike, say, a Kawasaki ZX-14. I'm sure that I could recompense you for any out of pre-tax pocket expenses....

    We just went through this at work. We applied to get bikes on the list, given that there are quite a few guys here that ride. Unfortunately due to adminstrative issues, it was knocked on the head.

    As for the other poster talking about private/business usage mix, I dunno what she/he is on about. A typical novated lease that employees take up has a basic formula of:

    0-15,000 km 26% FBT (of value of the vehicle at time of lease)
    15,000-25000 km 20%
    25,000-40,000 km 11%
    Over 40,000 km 7%

    There is no business/private use formula that's used. It's a salary packaging deal, not one meant for giving an employee a car for work use. That's something separate, and as such would subjected to different tax laws.

    In case anyone's interested, I'm on my 3rd vehicle now, so I've had some experience in this area, and a fair bit of advice, both professionally and from others who've been down this path.

    My next lease will probably be an associate lease, a similar concept except that you lease the vehicle from your spouse and pay her. Neat way of income splitting.